Navy's Progress in Improving Physical Inventory Controls and the Magnitude, Causes, and Impact of Inventory Record Inaccuracies in the Army, Air Force, and Defense Logistics Agency
NSIAD-84-9
Published: Nov 04, 1983. Publicly Released: Nov 04, 1983.
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Highlights
Pursuant to a congressional request, GAO reviewed the: (1) Navy's progress in improving physical inventory controls; (2) magnitude, causes, and impact of physical inventory adjustments in the Army, Air Force, and Defense Logistics Agency (DLA); and (3) adequacy of Department of Defense (DOD) policies, procedures, and efforts to improve physical inventory controls and inventory record accuracy.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense, to improve physical inventory controls and inventory record accuracy, should adopt on a DOD-wide basis actions taken by the Navy to recognize inventory record accuracy as a major concern and upgrade the command priority and emphasis given to physical inventory programs. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should expand the frequency and scope of quality control checks of work processes affecting inventory record accuracy at both the depot and inventory management levels. At a minimum, expanded quality control programs should include weekly sampling checks of the quality of research efforts to identify and correct recurring error causes, as well as the validity of reconciliations of major physical inventory differences and reversals of physical inventory adjustments. Also, it should be required that quality control results be reported to depot and inventory control point commanders and higher management levels and that a feedback system be established to ensure that problem areas repeatedly noted by quality checks are corrected promptly. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should require inventory management levels to report the results of causative research of physical inventory adjustments to higher management levels and establish a feedback system to ensure that recurring error causes are being identified and corrected. Also, inventory management levels should be required to report results of causative research to affected depots and have the depots use the results to identify problem areas warranting expanded quality control coverage. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should rescind the recent DOD policy changes that: (1) increase the timeframe for reversing physical inventory adjustments from 90 days to 1 year; and (2) increase the dollar criterion for researching physical inventory adjustments for pilferable items from over $2,500 to over $4,000. |
Closed – Implemented
DOD did not agree with the first part of this proposal. However, it stated that the MILSTRAP revision establishes more stringent controls by which reversals can be processed and provides for reporting these reversals to top management.
|
| Department of Defense | The Secretary of Defense should direct the Air Force to comply with the intent of the DOD policy by limiting preadjustment research to reconciliations of physical differences caused by recent unprocessed transactions that occurred immediately before or during the physical inventory control period. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should establish uniform standards for gross physical inventory dollar adjustment ratios based on the value of materiel inventoried. Also, uniform standards should be established for reversals of physical inventory adjustments. |
Closed – Not Implemented
It was the position of DOD that establishing standards was not practical because of the great diversity of items managed by DOD components.
|
| Department of Defense | The Secretary of Defense should require that reversals to physical inventory adjustments be viewed equally with physical inventory adjustments by DOD and its components in assessing overall inventory record accuracy performance. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should require the Inspector General and inventory control review teams in the services and DLA, as a part of their periodic annual inspections, to examine the quality of physical inventory performance, including the adequacy of efforts to identify and correct recurring error causes, as well as the validity of reconciliations of physical inventory variances and reversals of physical inventory adjustments. The Secretary should also require more frequent and indepth service and DLA-wide coverage of wholesale physical inventory controls and inventory record accuracy by internal audit organizations. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should expand DOD plans to develop procedural requirements and techniques to relate impact of physical inventory adjustments on requirements determination and procurement to include identification of adjustments affecting mission essential items. The Secretary should also require that data on physical inventory adjustments affecting requirements, procurements, and mission essential items be reported to DOD and be included in the quarterly inventory control effectiveness report. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense, to improve physical inventory controls and inventory record accuracy, should adopt on a DOD-wide basis actions taken by the Navy to require that merit pay objectives/performance evaluations of military and civilian personnel involved in functions affecting inventory record accuracy include a mandatory entry on inventory record accuracy and materiel accountability performance. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense, to improve physical inventory controls and inventory record accuracy, should adopt on a DOD-wide basis actions taken by the Navy to have top management provide clear guidance to depots and inventory managers that falsified reporting of physical inventory performance and inventory accuracy results will not be tolerated and that, if found, the strongest disciplinary actions will be taken. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense, to improve physical inventory controls and inventory record accuracy, should adopt on a DOD-wide basis actions taken by the Navy to identify the training needs of depot and inventory control point supply personnel and ensure that training is provided. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense, to improve physical inventory controls and inventory record accuracy, should adopt on a DOD-wide basis actions taken by the Navy to establish standard rewarehousing procedures that, at a minimum, will limit the amount of materiel movement to the lowest possible level, provide standard materiel movement controls to ensure that materiel location changes are reflected promptly on depot locator records, and require that either quality sampling checks or complete location surveys be made following rewarehousing projects to ensure that the new locations of rewarehoused materiel are reflected promptly and accurately on locator records. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Equipment inventoriesInternal controlsInventory control systemsMilitary inventoriesMilitary materielPolicy evaluationRecords managementReporting requirementsMilitary forcesInventory